Fidelity International (Fidelity) has established an outstanding reputation in the management of fixed income portfolios since 1990. Our impressive performance is the result of a well-defined investment philosophy, a commitment to research and an established portfolio management process.
It is the combination of these strengths that differentiates Fidelity from our competitors in fixed income portfolio management. It allows us to consistently meet our clients' needs, delivering attractive risk-adjusted returns irrespective of the market environment.
We believe that Fidelity, more than any other company, has a single-minded determination to deliver the best for our clients. The strength of our resources - throughout the business - ensures we can achieve this goal.
Our approach combines the specialist expertise of portfolio managers, credit and quantitative analysts, and traders. We have teams of specialist fixed income analysts in London, Hong Kong, India and Tokyo and can also draw on the work carried out by Fidelity Management and Research (FMR), in Boston. As a result, we are able to leverage the findings of over 200 fixed income specialists* and with this team - one of the largest networks of its kind in the world - we are able to leverage the international resources to identify opportunities and ensure consistency in portfolio style and performance. The remuneration of all team members reflects the performance of the portfolios they influence, ensuring that the objectives of our team members and our clients are inextricably aligned.
Portfolio managers have final responsibility for all investment decisions and strategy relating to their portfolios. Quantitative analysts search for investment opportunities and measure the risk profiles of portfolios. Credit analysts, through face-to-face meetings and detailed analysis, identify strong credit stories and avoid picking deteriorating credits. Our credit analysts also work closely with Fidelity's renowned team of equity analysts to provide extra insight into business plans of corporate bond issuers. Traders act as the eyes and ears of the portfolio managers, constantly searching for the best opportunities and prices.
Over the past decade, fixed income markets around the world have changed significantly. There are now more non-government issuers, they are more varied and they raise capital in more sophisticated ways. Changes to the macroeconomic environment have also had a direct impact on the style of portfolio management. As a result, fixed income markets offer a wide range of exploitable opportunities. We believe that a multi-strategy approach presents the best way to capture these opportunities, allowing us to generate attractive risk-adjusted returns.
The strategies that we use include:
Our portfolio managers have ultimate responsibility for portfolio construction and their primary role is to see that the client's objectives are met. They gather recommendations from analysts and traders and supplement these with their own ideas so that their portfolios reflect the best of Fidelity's investment expertise.
When creating a portfolio, the manager ensures that:
In this way, the manager is able to diversify the portfolio's active position. When it is successfully implemented, this approach can result in higher returns with lower than expected volatility or risk.
Controls are an integral part of our process. Risk control is integrated into our management process in the way we select individual securities. Portfolio managers adhere to guidelines for duration and credit and currency exposure relative to their benchmarks.
Portfolio management, trading, and administration are carried out by separate teams. We also have oversight committees, compliance teams, and controls on our employees' personal security trading. These measures reflect our aim to be in a class ofour own in terms of business ethics, as well as investment performance and client service.
We believe there are many different factors that affect bond prices. Conducting our own research on markets, sectors, industries, yield curves and individual bonds, using credit and quantitative analysis, is core to our investment process. Portfolio managers combine this research with highly focused trading skills to build multi-strategy portfolios in a way that delivers attractive returns.
* As of 31 March 2011. These figures reflect the resources of FIL Limited and FMR LLC. FIL Limited is able to access sub-advisory and research services from subsidiaries of FMR LLC. FIL Limited and FMR LLC are separate and independent companies with certain shareholders in common.